Hungary Home Loans to Rise as Company Credit Falls, Survey Says

Government interest-rate subsidies on housing loans will be
the main reason for an expected rise in mortgage lending, the
bank said in a quarterly lending survey published today.

Hungary’s government has offered interest-rate subsidies on
mortgages as it seeks to prop up the real estate market and
household lending. The nation’s economy is in its second
recession in four years as domestic consumption collapsed,
corporate lending plunged and the euro-area crisis sapped demand
for exports.

The number of companies with access to bank loans is
falling as fewer businesses are able to meet tighter credit
conditions, the central bank said. Banks are less willing to
extend credit to companies given the “unfavorable macroeconomic
environment and industry-specific problems,” the report said.

The survey was conducted before the government backtracked
on its promise to cut a special bank levy in half in 2013 and
announced an increase in the rate of a planned financial
transaction tax to 0.2 percent.

“Demand for long-term investment loans had fallen further
and the net percentage of banks reporting a decrease in demand
had last been similar in 2009,” according to the survey.

Investment volumes in the economy declined an annual 5.2
percent in the first three quarters of the year, the central
statistics office said earlier today.